Many stablecoins were shortlisted by hedge funds after the downfall Of Terra. One among them is Tether, the issuer of USDT, who calls the idea of hedge funds short-selling USDT is totally wrong. And it makes sense as they have clearly stated that they have the collateral backing USDT.
Tether says that shortlisting USDT is totally wrong and claims that the hedge funds which tried to unstabilize their coins have a basic misconception of both the crypto market as well as Tether. In a recent post from Thursday, Tether pointed out the particular matter while talking about the bearish crypto market in a Wall Street Journal Podcast, which was hosted by Luke Vargas and Caitlin McCabe.
More on Tether losses and Hedge Funds
Due to the recent shortlisting of Tether’s stablecoins by hedge funds, the company enjoyed a massive drop in its market cap since May 11 from 85.3 billion dollars to 65.8 billion dollars. However, it is still the largest stablecoin in the market.
In early May 2022, UST lost its peg differently and pulled down the price of LUNA, the Terra ecosystem native token, to a fraction of cents from around 60 dollars, creating vast losses for the investors and disturbing the market.
In the previous month, Tether’s CTO, Ardoion, officially confirmed that their stablecoin had become the target of a coordinated attack by different hedge funds looking to short sell Tether’s stablecoin to harm its liquidity. It indicates that the hedge funds are aiming to lower the coin’s price and buy it at a low amount to book better profit margins.
In a recent post, Tether claimed to reaffirm its strength and stability of financial banking along with the ability to honor redemptions, clearing out that it did not hold any type of Chinese commercial papers. Plsu, they have cut down their total holding of such papers by nearly 90 percent the previous year. They also added that they are trying to lower the commercial paper holding to 300 million dollars by the end of this month and to zero by the end of the year.
What are your thoughts as Tether calls the idea behind short-selling USDT totally wrong? How much do you think hedge funds would be able to lower the price of the coins? Let us know in the comments below. And, if you found our content informative, do like and share with your friends.